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Irish Company Registration and Taxation related question.We

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Irish Company Registration and Taxation related question.

We are in the process of registering a Limited Company with the CRO. On the A1 form there is a section called "Company capital and stamp duty statement" we have stated the total value authorized share as €1 Million and the total value issued shares €200.

I have two questions:

1. Shareholders should pay the €200 into the company bank account?
2. If the shareholders / directors of the business invest their own time to design e.g the website of the Company (as one of the directors are a creative designed) and/or write contents for the Companies website etc. How can we record these charges in the books of the company? Should we issue more shares i.e if the companies website would cost as €5000 if we appoint an independent designer, (but we do it ourselves) can the company just issue shares for the value of the service and assign those shares to the director/shareholder who completed the job. My point is how can we claim that as a expense or start up cost etc.

Thanks for the advice.
Submitted: 10 months ago.
Category: UK Tax
Expert:  Michelle-Mod replied 10 months ago.
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Expert:  TaxVince replied 10 months ago.

Hi. Thanks for your question.

Should you find the answer below incomplete or you are not fully answered, please drop a reply before rating.

I have two questions:

1. Shareholders should pay the €200 into the company bank account?
YES. THOUGH IN SOME CASES THIS CAN REMAIN AS A DEBTOR IN THE COMPANY'S BOOKS AS UNPAID SHARE CAPITAL. IDEALLY YOU SHOULD PAY THE ISSUED CAPITAL.

2. If the shareholders / directors of the business invest their own time to design e.g the website of the Company (as one of the directors are a creative designed) and/or write contents for the Companies website etc. How can we record these charges in the books of the company? Should we issue more shares i.e if the companies website would cost as €5000 if we appoint an independent designer, (but we do it ourselves) can the company just issue shares for the value of the service and assign those shares to the director/shareholder who completed the job. My point is how can we claim that as a expense or start up cost etc.
THERE ARE SEVERAL WAYS OF DOING THIS. THIS COULD EITHER BE TREATED AS UNPAID EXPENSE IN THE COMPANY. MORE LIKE WHEN YOU HIRE SOMEONE INDEPENDENT AND YOU DONT PAY THEM. THE CREDITOR/SHAREHOLDER LOAN ACCOUNT IS RECORDED AS UNPAID AMOUNT. THIS CAN BE SETTLED WHEN THE COMPANY HAS ENOUGH FUNDS OR THIS CAN BE CONVERTED TO SHARE CAPITAL DOWN THE LINE (OR NOW).

ALTERNATIVELY YOU COULD ISSUE MORE SHARES OR INCREASE THE VALUE OF EACH SHARE OR SIMPLY SHOW THAT AS SHARE PREMIUM SO THAT THE SHARE CAPITAL OF THE COMPANY INCREASES.

IN ACCOUNTING TERMS THE OPTIONS ARE THAT YOU DEBIT THE EXPENSE IN THE COMPANY'S BOOKS AND CREDIT SHAREHOLDER LOAN/CREDITOR
OR
DEBIT THE EXPENSE AND CREDIT SHARECAPITAL

 

Ofcourse there are a few tax implications if you start charging the company whether the expense is paid or simply accrued. To understand the tax implications you may need to consult your accountant or an Irsih tax expert.

Hope this helps.

TaxVince, Accountant
Category: UK Tax
Satisfied Customers: 961
Experience: Chartered Accountant >20 years + Qualified IFA
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